Mergers don’t deliver

Published Friday 1 September 2006 12:00 am

The belief that the major logistics companies are meeting their customers’ needs by the recent spate of mergers to form megalogistics service providers is not shared by the customers they serve. That is the finding of a survey conducted in the UK by SCALA Supply Chain and Logistics Consulting.

The survey highlighted some differences in perspective between logistics companies and their customers. John Perry, managing director of SCALA, says: ‘The significant finding is that logistics companies see benefits in growth through being able to provide a wider range of services; a more integrated service with further benefits from increased synergy and operational cost benefits. Unfortunately a large proportion of their customers don’t see it that way,’

He adds that in spite of all the growth of the major logistics companies 91 per cent of the customers responding used more than one logistics company – and the three main reasons they gave for this were that no one company could provide the full range of services, different companies were better in different aspects or geographical areas and, most significantly, 72 per cent said that from a strategic business perspective they would not want to move to a single company.

Perry says there are significant areas where both logistics providers and customers broadly agree. More than 90 per cent of both groups say that future choice would be reduced as a result of the mergers. Almost 80 per cent believed that there would be even more cost pressure on the smaller contractors; and less than 10 per cent of both groups believed there would not be any resulting improvement in management capability and customer service levels.

Some 95 per cent of logistics companies said that the range of services they offered had been extended but only 25 per cent of customers agreed, with the rest saying this was not the case or was irrelevant.

‘There is a serious mismatch between the expectations and experience of service providers and users,’ Perry adds. ‘There are also significant differences in perspective on integrated supply chains. While 94 per cent of logistics contractors claimed to offer a fully integrated supply chain service just seven per cent of customers said their contractors could provide this.’